The Balancing Act: Tips for Setting Your Freelance Rates

When I started freelancing in 2005, I would do a 500-word article for $8-$10. I’m sure when I was desperate to build my portfolio I even accepted $5 the odd time. I can tell you now that I would NEVER recommend any new freelancer set their rates that low in the beginning. I was lucky if I was making $10-15 an hour, which was definitely not enough for me to live on, especially as a single mother.

But setting your freelance rates can be a tough line to walk. Charge to little and you are working so much you might as well just let your friends and family know they won’t see you for the next few months. They might see you during the holidays if they’re lucky. Set your rates too high and your competition will undercut you and you’ll be left grasping for the low-hanging fruit.

The question is where do you draw the line?

You start with what you want your annual salary to be. What do you want to make per year? $75,000? Six figures? Remember that you have a lot to incorporate into your annual salary beside just your general take-home pay:

• Vacation pay
• Sick leave
• Health insurance
• Retirement expenses
• Overhead expenses (fees, exchange rates, office equipment, internet, utilities, etc.)
• Those hours you spend in front of the computer, not ding actual client work (looking fr new clients, marketing, etc.)

So, say a salaried job with an employer was $60,000 a year. This salary included your vacation, sick leave, office space with furniture and equipment, health insurance, and contributions to your retirement savings. That $60,000 will go a lot further than the same salary when freelancing. You need to add at least $20,000 to your annual salary to cover these extra expenses, at least if you want a decent vacation and retirement fund. In this case, it’s $60,000 + $20,000 = $80,000.

Next, you need to decide how many hours a week you want to work. Will you work a full 40-hour week? Or does 30 hours sound more manageable? Are you going to take four weeks of vacation every year? Say you work 30 hours a week, 48 weeks of the year. To make your $80,000, you will need to charge $55.67 per hour.

Now, for many freelancers, it’s better to charge a flat rate, rather than an hourly rate. I know as a writer, I would much prefer to set my fees based on word count or scope of project. That means that I have to have a good handle on how long it takes me to write say 1,000 words.

I can tell you that it takes an hour to an hour and a half, depending on the material. If the work is more complicated, it could take as much as two hours. I factor that into the cost. I want to make $80 per hour, which means my minimum acceptable rate is 8 cents per word, which works out to $80 per 1,000 words. When writing white papers, that cost can be as high as 25-35 cents per word or more.

Having said this about my fees, I am really rethinking them in light of what I have learned about women freelancers earning less than men. See, last week’s blog post for that eye-opening discussion.

In addition to setting your annual salary, hourly rate, and flat fee, here are some other tips for determining what you earn as a freelancer:

• If you are new to freelancing, I get that you want to make your rates competitive. However, that still doesn’t mean charging bottom-of-the-barrel fees. Instead of charging $80 per hour, maybe you’ll charge $30. Once you start building your portfolio, you can start increasing your fees.
• Never offer free work, even in the beginning. This means you don’t get paid and it’s what clients will come to expect. It’ll be difficult to raise your fees if you start out on super cheap or freebie footing.
• Offering your work for lower rates can often cost you clients who would have hired you if you charged more. It’s not unusual for high-quality clients to see low rates and interpret that to mean you are not as experienced, skilled, or qualified as they would like.
• Be willing to negotiate, but set the minimum rates you will accept and never go below them. I promise there are always other clients out there.
• NEVER EVER short-change yourself. You are worth a good rate of pay. You are talented enough to earn good money.

Honestly, as I have raised my rates over the years, I always worried I wouldn’t get clients at my new rates. But I always have, every single time. Not only that, but the quality of my clients has increased as a result. I have never been without work in my entire 13+ years as a freelancer. Not once.

If you are in writing and editing and you are curious about standard rates, check out the Editorial Freelancers Association rate recommendations. If you are looking for information and support for your industry, just Google it. There are plenty of resources out there for freelancers in graphic design, photography, and more.

And let’s not be afraid to share our rates with one another. Let’s be open so we can come together and raise our rates collectively as women freelancers. This will make us more visible and more competitive in the marketplace. It will help us gain equal footing with the men out there who are earning more as freelancers.

Finally, setting your rates appropriately is just the beginning. There are other ways you can increase your income and bring in more freelance work and I will talk about those in my next post.

In the meantime, I would absolutely love to hear from you. Feel free to comment on this post, ask questions, and share your experience. Remember, it is my hope that this becomes a community where conversations happen. I don’t just want you to read my posts, I want you to engage with me and with each other! Together, we can help each other be stronger.